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​Is Gold’s Day in the Sun Coming Soon?

After the recent market shake up, the questions of “what happened” and “what next” is definitely on all of our minds here at Dent Research. I’ve no doubt it’s on your mind too.

The biggest question everyone’s trying to answer: Is this the end of the bull market?

I still think that January 26 looks like a top, with its parabolic nature, but thanks to one technical indicator in particular, I have some idea of what might come next…

Yesterday, I emailed to say that I believe we’re seeing Rising Bearish Wedge Scenario Type 2 unfolding right now. The markets tested the bottom trend line three times last week on Tuesday, Wednesday, and Friday – yet still managed to rally even after a clearer break on Friday. Now, it’s likely that markets will move up somewhat and then mostly sideways for a while… then they’ll retest and finally break the critical bottom wedge trend-line in the weeks ahead. Then we could be down 40% from the top in a matter of a few months. But we need to convincingly break that down trend line. And Friday was obviously not enough, despite a clear break, which makes me suspect that the Federal Reserve stepped in and bought stocks to support the market as China’s government did in late 2015.

In his most recent Economy & Markets article, appropriately titled “What the @#$! Just Happened?!”, John explained why he doesn’t think last week’s market action is the start of a bear market just yet.

Understand, John is possibly more bearish than I am right now! Still, he has good reasons for believing that the recent market action related more to the short volatility trade than a market event that could take down stocks to major bear market levels.

Charles expressed a similar view in his latest Economy & Markets article entitled “It’s Not Time to Go Bargain-Shopping Just Yet.” As he says, “Expensive markets can always get a lot more expensive in the short-term, particularly when the economy is strong as it is today.”

It may not be time to go bargain shopping just yet, but there is an opportunity you can take advantage of now. Adam O’Dell, our Chief Investment Strategist, uncovered it recently, and it’s something I have been seeing in an uptrend for a while now. I’ll let him give you the details below.

But, before I hand you over to Adam, I want to make very clear that I’m still bearish on gold in the medium term.

I still firmly believe that gold prices could slide to as low as $700 an ounce between now and 2020. When the commodity cycle turns around, gold will regain its former glory and then some. But, that’s still years away.

Gold is an inflation hedge. I expect deflation to grip the world in the coming years. That’s the biggest mistake that gold bugs make. They think gold is a crisis hedge. It’s not. I detail this and more – in fact, I lay out my full case for gold $700 – in my eBook, How to Survive and Thrive During the Great Gold Bust Ahead.

However, the key to Adam’s recommendation below is that it’s a short-term play. I have been saying for many months that gold was due for a bear market bounce up to a range of $1,375 minimum to $1,428 maximum. There are clearly inflationary fears in the market now, and Adam intends to take advantage. Read about what he has to say here!

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